Pension benefit enhancements will be subject to voter approval in one California county following the approval of a ballot measure in a move that could lead to the adoption of similar measures around the US for public employees systems.

Voters in Orange County, California approved the measure by a three to one margin in a move designed to control spending for the $7bn (€5.4bn) defined benefit scheme.

When the measure is implemented next year, voters will see an actuarial study showing the cost of increased pension benefits and the impact on the county's unfunded liability if the pension board approves enhancements to the pension fund.

Orange County has an unfunded liability of $2.7bn. Its funded status, the proportion of assets against liabilities, is 73%. In 2000, the scheme was fully funded, according to John Moorlach, the chairman of the board of supervisors for Orange County and author of the measure.

Moorlach said he introduced Ballot Measure J to control contribution rates that “have gone through the roof” in recent years.

Critics of the measure said financial decisions should not be left up to voters, but to the pension board.

San Francisco passed a similar measure 100 years ago and has fully funded employee pensions, according to Orange County documents making the case for Measure J.

Moorlach said pension fund members were paying to fund a retirement lifestyle they would be unlikely to share as a result of the shortfall. Although the measure alone will not reduce the shortfall, Moorlach said it would prevent it from rising.

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Two years ago, the county established financial incentives to encourage pension fund participants to retire later in a move designed to increase the funding period.

Moorlach said several participants in the pension fund sector were eying the measure.

Many public pension funds have suffered losses as a result of the downturn in the equities and bond markets, asset classes where the majority of pension fund money is invested. Public employee pension plans in states such as California, Maryland, Tennessee and North Carolina have had billions wiped off the value of their assets under management.

Separately, South Dakota voters rejected a ballot proposal to ban naked short selling, a move the state government had campaigned against, arguing it would create needless complications for businesses and hurt the local economy.